Despite Challenges, Pakistan Sets Ambitious Revenue Target for Petroleum Levy in the Next Fiscal Year
Pakistan has set its sights on generating approximately Rs870 billion through the petroleum levy in the upcoming fiscal year 2023-24, as revealed by budget documents. This ambitious target reflects the government’s determination to bolster revenue despite prevailing challenges in the petroleum sector.
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During the outgoing fiscal year 2022-2023, the Pakistani government initially aimed to collect Rs855 billion through the petroleum levy. However, this figure was later revised downward to Rs542 billion. As a result, the government now faces the task of collecting an additional Rs328 billion during the next fiscal year to reach its ambitious revenue target.
One notable aspect of this plan is the government’s decision to increase petroleum prices in the upcoming fiscal year. This decision comes even as the country benefits from the arrival of affordable oil from Russia and falling international prices. The move indicates the government’s intention to leverage the petroleum sector to generate the necessary funds, despite external factors suggesting otherwise.
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The decision to maintain petroleum prices during the outgoing fiscal year was driven by two key factors. Firstly, the massive depreciation of the Pakistani Rupee (PKR) against the dollar prompted authorities to keep prices stable. Secondly, the higher amount of petroleum levy imposed also influenced the decision. These measures were taken to mitigate the impact on consumers and stabilize the economy during a challenging period.
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However, the target for the petroleum levy in the previous fiscal year fell short due to a significant decline in domestic petroleum sales. According to analysts at Arif Habib Limited, domestic sales of petroleum products witnessed a sharp decline of 26 percent during the 11-month period from July 2022 to May 2023. This decline in sales adversely affected the overall revenue collection under the petroleum levy.
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Despite these setbacks, the Pakistani government remains committed to boosting revenue through the petroleum sector in the upcoming fiscal year. The ambitious target of Rs870 billion demonstrates the government’s proactive approach to addressing fiscal challenges and stimulating economic growth. It is expected that the government will undertake strategic measures to encourage increased domestic petroleum sales while balancing the impact on consumers.
As the fiscal year 2023-24 approaches, all eyes will be on Pakistan’s petroleum sector and its ability to meet the revenue target through the petroleum levy. The success of this endeavor will not only contribute to the country’s economic stability but also impact the daily lives of its citizens through the effective management of petroleum prices and associated benefits.
